DEACONS v. WISEKING MINING INVESTMENT CO LTD AND ANOTHER

DCCJ 3097/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3097 OF 2010

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BETWEEN

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DECISION 

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Introduction

1.  This is an appeal against a Master’s decision.

Background

2.  On 7 September 2010, the Plaintiff commenced the present proceedings against the two Defendants.

3.  The Plaintiff was and is a firm of solicitors.  Briefly, it said that, from about January to May 2010, legal services were provided and invoices were issued to the 1^st Defendant.

	Invoice	Date	Amount ($)
(i)	1323799	26.2.10	403,298.70
(ii)	1327987	31.3.10	111,916.40
(iii)	1332426	30.4.10	26,864.42
(iv)	1336960	31.5.10	89,103.60
Total			631,183.12 ========

4.  The 2^nd Defendant was and is the majority shareholder and one of the 2 directors of the 1^st Defendant.  The Plaintiff said that both Defendants had failed to pay the invoices and so, the present proceedings were brought against them.

5.  Both Defendants contested the proceedings.

6.  The 1^st Defendant however admitted that it did instruct the Plaintiff to render legal services in relation to its corporate matters. The invoices were issued but they were not paid because:

“8. ….. It is averred that the Invoices are unreasonable, overcharged and far from the 1^st Defendant’s estimation and expectation. The 1^st Defendant reserves its right to amend this Defence after the taxation of the Invoices.

Particulars

(a) The Plaintiff had failed to provide a fee quote or a capped fee and abortive fee to the 1^st Defendant when the 1^st Defendant engaged the Plaintiff to act for the 1^st Defendant.

(b) No fee proposal was given until the date when the Plaintiff sent the 1^st Defendant the retainer letter at a later stage on 5^th May 2010 when fees estimate was given for the first time, the Plaintiff’s services came to an end within a fortnight thereafter.

(c) The Plaintiff started to charge from 21^st January 2010, however, it is averred that the 1^st Plaintiff should only charge from the 26^th January 2010.

(d) On 26 January 2010, the meeting was lasted for 2 hours, the Plaintiff recorded 2.4 hours in their invoice.

(e) On the following dates:-

(i)   1^st to 4^th, 10^th, 22^nd to 24^th February 2010;

(ii)   2^nd to 18^th, 19^th to 23^rd and 31^st March 2010; and

(iii)   4^th to 7^th, 11^th and 17^th May 2010

it was recorded in the invoice that there were redundant discussions between the Partner I, Partner II and the Associate(s), the 1^st Defendant believes that there were too many people working on the same task and hence it incurred excessive fees charged for communications.

(f)   On 24^th February 2010, the meeting was lasted for 1 hour but it was recorded 1.8 hours in the invoice.

(g)   On 18^th March 2010, the conference call of Alexander Que (Partner II) was lasted for 1 hour, but it was recorded 2 hours in the invoice.

(h)   On 18^th March 2010, a conference call of Myles Seto was lasted for 1 hour, but it was recorded 2 hours in the invoice.

(i)   On 12^th to 14^th April 2010, the 1^st Defendant believes that there were excessive internal discussions held among the Associates.”

(The Amended Defence of the 1^st Defendant)

7.  On the other hand, the 2^nd Defendant disputed having instructed the Plaintiff to render legal services.  He denied any obligation to pay at all.

8.  The Plaintiff then took out an application for summary judgment, and in the alternatively, an interim payment, against the 1^st Defendant.  The Master heard the applications on 27 January 2011, dismissed them and granted the 1^st Defendant unconditional leave to defend the case.  Costs of the application were made costs in the cause.

9.  The Plaintiff disagreed with the decision and took up the matter to appeal.

10.  I heard the appeal on 21 March 2011.  The Plaintiff was represented by Mr. Hanusch, and the 1^st Defendant, Ms. Yung of Counsel.  Having heard from them, I reserved my decision to be handed down.  On 26 April 2011, the Plaintiff sent to me a recent decision Wong Chi Ping v. Fung Wong Ng & Lam (HCMP 1487/2010) dated 8 April 2011. Ms. Yung then also submitted her supplemental submission on 5 May 2011.

Decision

11.  Upon consideration of all the evidence, authorities and submissions from the parties, I have decided to grant summary judgment on liability against the 1^st Defendant.  Thereafter, parties should proceed to resolve the quantum in the High Court.  As to the alternative application for interim payment, I take the view that $200,000 should be paid at this stage.  My reasons appear in below.

Reasons

12.  The starting point is that, as far as liability is concerned, there cannot be any triable issues or some other reasons for trial.

(a)   The 1^st Defendant agreed that it had instructed the Plaintiff to provide legal services.  The obligation to pay fees on the part of the 1^st Defendant is therefore unquestionable. The question as to whether 2^nd Defendant or other shareholders of the 1^st Defendant will be jointly and/or severally liable to pay the fees does not affect the liability of the 1^st Defendant.

(b)   The 1^st Defendant also agreed that it had received the monthly bills, but did not pay for them. 

(c)   Ms. Yung kindly and rightfully conceded that the 1^st Defendant had to pay the Plaintiff something ultimately in these proceedings.

(d)   The question of section 56 Legal Practitioners Ordinance (Cap. 159) was raised at the hearing before the Master.  It was suggested that summary judgment should not be given as there was no written agreement between the parties.  Section 56(3) LPO states that:

“The agreement shall be in writing and signed by the person to be bound thereby or his agent in that behalf.”

Nevertheless, at the hearing before me, both parties agreed that the above section did not make a written retainer a mandatory requirement.  An agreement to provide legal service is nothing more than an example of a contract.  It can be made orally, in writing or by conduct and/or a combination of them.  However, of course, to avoid unnecessary argument, it is advisable to have something in writing before the provision of services. Indeed, if one also looks at other provisions of section 56, the purpose of the Ordinance will become clear.

“(1) ….. a solicitor and his client may [emphasis added], either before or after or in the course of the transaction of any non-contentious business by the solicitor, make an agreement as to the remuneration of the solicitor in respect thereof.

(2) The agreement may [emphasis added] provide for the remuneration of the solicitor by a gross sum, or by commission or percentage or by salary, or otherwise, and it may be made on the terms that the amount of the remuneration therein stipulated for either shall or shall not include all or any disbursements made by the solicitor in respect of searches, plans, travelling, stamps, fees or other matters.”

13.  By going quickly the disputes raised by the 1^st Defendant at paragraph 8 of its Defence, as recapped in paragraph 6 above, one can see that they are indeed usual objections raised by the paying parties in taxation.

(a) Taxation is the most appropriate way to resolve the parties’ disputes.  As observed in by the Honourable Mr Justice Woo, V-P in Oldham, Li & Nie, Solicitors v. Wong Lin Chooi also known as Clara Chan, CACV 319/2005,  Judgment dated 1 March 2006:

“6. The way to deal with this apparent conundrum is obvious. As all parties were well aware, the taxation of the bills is within the jurisdiction of the Court of First Instance, and in particular, the taxing masters of that court possess the required expertise. The judge should either on his own motion have had the matter transferred to the Court of First Instance or acceded to the application of the defendant for the transfer, so that all the disputes between the parties can be conveniently resolved. Although the claim is within the District’s monetary jurisdiction, this cannot be a valid reason for refusing to transfer the case to the Court of First Instance for it to deal with the matter as a whole, especially where the District Court lacks jurisdiction to deal with the disputed quantum, an integral part of the claim.

(b) I should perhaps further add that, the taxing master was indeed given supplementary powers so that he or she could give specific directions to resolve the parties’ argument, if necessary.

“Supplementary powers of taxing master (O.62, r.14)

14. A taxing master may, in the discharge of his functions with respect to the taxation of costs –

(a)   …..;

(b)   …..;

(c)   examine any witness in those proceedings;

(d)   direct the production of any document which may be relevant in connection with those proceedings;

(e)   …..”

(c)   Both parties were not seriously opposing to taxation.  They simply could not agree on whether judgment on liability should or should not be entered.  Sometimes, parties could agree a stay of the proceedings, pending the result of taxation. They could also agree to be bound by such result.  However, they have to be done with consensus from both parties.  In the present case, for whatever reason, this Court has to make a ruling because parties could not agree on their own terms.

(d)   Although parties did not specifically discuss this at the hearing, it should not be overlooked that the District Court do not have the necessary jurisdiction to order a taxation to be done (section 2 of the Legal Practitioners Ordinance (“LPO”) and Kao Lee & Yip v. High View Properties Ltd. & Another [1988] 1 HKLR 555).

(e)   Hence, the only practical option available to me is to transfer the determination of quantum to be dealt with by the High Court.

(f)   I have thought about whether the whole proceedings should be transferred to the High Court, as in the said case of Oldham, Li & Nie, Solicitors. However, the present application does not concern the 2^nd Defendant and I do not have an opportunity to hear from him. Hence, it will not be appropriate for me to do so.  

(g)   The latest authority submitted by the Plaintiff does not assist us in the present context because, as pointed out by Ms. Yung, the parties hereto are not disputing whether special circumstances can be established so that the solicitor’s bill which having been issued over 12 months are still to be referred to taxation.  

14.  As only summary judgment on liability is to be entered, with quantum to be determined, I need to move to the alternative application for interim payment to see if I should make any order at this juncture.  Paragraph 29/12/4 of HKCP 2011 at P. 633 sets out the relevant principles:

“An application for an interim payment under O.29, r. 12(c) should be considered by the court in two stages. The court must first be satisfied that, if the action proceeds to trial, the plaintiff will obtain judgment for a substantial sum, and, if so, the court should then consider whether, in its discretion, it should order an interim payment. At the first stage the plaintiff must satisfy the court on the balance of probabilities, but to a high standard, that he will obtain judgment for a substantial sum; the likelihood of a set-off or any other defence succeeding must be considered by the court. At the second stage the rules also require the court to take into account any set-off claimed by the defendant, and also any counterclaim arising out of some other transaction and not available as a defence (Shanning International Ltd. v. George Wimpey International Ltd. [1988] 3 All E.R. 475, CA).”

The Plaintiff in the present case is in a better position than the usual ones because the former need not satisfy me on the question of liability.  How should the “substantial sum” be determined herein?

15.  Certainly, the exact amount is going to be fixed after determination, and possibly by way of taxation.  I do not propose to do one now, even a mini one.  The lists of objection and relevant documents are not before this Court.  However, I take the view that a “lump sum” assessment based on all the relevant considerations and materials before me can help.

16.  First, it will be a solicitor and own client “taxation”.  O.62 r.29 RHC states that:

“Costs payable to a solicitor by his own client (O.62, r.29)

29(1) On the taxation of a solicitor’s bill to his own client (except a bill to be paid out of funds provided by the Legislative Council pursuant to section 27 of the Legal Aid Ordinance (Cap. 91), or a bill with respect to non-contentious business) all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.

(2) For the purposes of paragraph (1), all costs incurred with the express or implied approval of the client shall, subject to paragraph (3), be conclusively presumed to have been reasonably incurred and, where the amount thereof has been expressly or impliedly approved by the client, to have been reasonable in amount.

(3) For the purposes of paragraph (1), any costs which in the circumstances of the case are of an unusual nature and such that they would not be allowed on a taxation of costs in a case to which rule 28(2) applies, shall, unless the solicitor expressly informed his client before they were incurred that they might not be so allowed, be presumed, until the contrary is shown, to have been unreasonably incurred.”

17.  Second, though there is no list of objection filed, the 1^st Defendant did set out similar objections on its Defence, as recapped in paragraph 6 of this Decision.

18.  Based on these “objections”, Mr. Hanusch submitted, inter alia, that an amount of $241,378.12 was not disputed, even taken that they were allowed in full.

19.  I notice that some of the “objections” might succeed, some might lose.  I also note that they will be transformed to the proper lists of objections which might include more details and/or items.

20.  With all the above in mind, I take the view that a sum of $200,000 should be the substantial sum that I can be satisfied in the circumstances.  I so order accordingly.

Conclusion

21.  To conclude, I will make the following orders:

(a)   The order made on 27 January 2011 herein is set aside.

(b)   Summary judgment on liability is entered for the Plaintiff against the 1^st Defendant with quantum to be determined.

(c)   The determination of the quantum is to be transferred to the High Court for further directions.

(d)   The 1^st Defendant shall pay $200,000 interim payment to the Plaintiff.

(e)   For the avoidance of doubt, the proceedings as between the Plaintiff and the 2^nd Defendant are remained at the District Court to be processed in its usual way.

(f)   There is an order nisi that the 1^st Defendant do pay half costs of the proceedings up to the date hereof as well as the whole of the costs of the appeal and application before the Master, to be summarily assessed by me (1 hour reserved), failing agreement between the parties within 35 days from the date hereof.